Medicare & Medicaid – Fraternal Twins? Part II


In our last newsletter, I outlined the common roots of Medicare and Medicaid, comparing them to fraternal twins. I related that as a mother of identical twins, I’m often asked how I tell them apart. Are there any tricks? What are their similarities, what are their differences? As an elder law attorney, I’m often asked very similar questions, but instead of the subject being my twin daughters, clients are asking about Medicare and Medicaid. While working on the article about Medicare, it hit me– Medicare and Medicaid are fraternal twins! After a lengthy gestational period of over 60 years, they were “born” on the same day, both children of the Social Security Act. Like many twins, their names even sound alike, to the amusement and frustration of all those who know them. However, unlike identical twins who carry the same genes, Medicare and Medicaid are definitely fraternal twins, who have different characteristics and coverages. Last time, I focused my attention primarily on the history behind the creation of the two programs and a more in-depth description of Medicare, now, I give ‘Baby B’ or Medicaid, its turn in the spotlight.

Brief descriptions of Medicaid and Medicare.

Medicaid is the jointly funded Federal-State health insurance program for low-income and needy people. It covers children, the aged, blind, and/or disabled and other people who are eligible to receive federally assisted income maintenance payments.

Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD)

How can I keep them straight?

Many people, clients and professionals alike struggle to differentiate between these two programs. With such similar names, and some overlap in coverage, it is no wonder. It is often only when both programs come into play, and the eligibility issues come to light, that many of our clients and their families start to fully understand the difference.

It’s easy, with just this quick thought process: We CARE for everyone. We provide AID to those who need it.

What do I need to know about each of them?

Medicare: Much broader eligibility rules, with minimal financial criteria.

With very few exceptions, as long as an individual (or their spouse) has paid into the Medicare system, he or she will have Medicare as their primary health insurance after reaching the age of 65. Medicare was not designed to cover everything; it was intended to provide basic health insurance. For a more thorough explanation, please see our last newsletter.

Medicaid: Strict eligibility rules, based primarily on financial need.

Medicaid, on the other hand, has a complex and constantly changing set of rules and regulations, based on Federal and State law. Income, assets, age, and health conditions are all relevant when determining Medicaid eligibility.

The Medicaid program encompasses a wide variety of programs designed to provide aid to those that are determined to need it. Medicaid is just as political as Medicare, if not more so. Medicaid benefits vary from state to state. While commonalities exist, each state puts its own mark on the program. For the purposes of this article, I will focus on the Medicaid rules in Michigan.

The Michigan Medicaid program is administered by the Michigan Department of Health and Human Services (“DHHS”). The complex federal and state structure is established through Federal Laws that outline the basic framework of the program, which is then fleshed out by each state.

From the Womb to the Tomb

In Michigan, some of the Medicaid programs available are for pregnancy services and childhood medical care (including programs for children with special conditions whether physical or mental or children living in poverty). Assistance is available for child care, and for early learning programs to children identified to be at risk. Supplemental food programs are available to low-income individuals and families. Healthy Michigan, which is a form of Expanded Medicaid, introduced on April 1, 2014, now covers formerly uninsured people in Michigan with a basic level of health insurance, with costs based on income.

Medicaid programs are available for people diagnosed with specific conditions, such as breast and cervical cancer. Medicaid programs include emergency relief for housing and utilities. Assistance is available to persons over age 65 or to those who have been determined disabled. Programs exist to help Medicare beneficiaries pay for Medicare premiums, copays and deductibles. Medicaid provides coverage to help offset the costs of long-term care, either in a skilled nursing facility or, in some circumstances, in the home. In very rare situations, Medicaid even provides an extremely modest burial amount for those who have died in the direst financial circumstances.

Basic Eligibility Concepts

Eligibility guidelines for each of these programs differ. While some programs allow for an application process with minimal documentation, others require substantial verifications to establish that you have met the eligibility requirements. The rule of thumb is that the more expensive the benefit you are trying to qualify for, the harder it is to qualify. For individuals who are seeking assistance with nursing home care, the eligibility and application process can be quite overwhelming, with complicated rules and regulations. An individual’s income, assets, marital status, medical need and much more is thoroughly reviewed. The financial situation of an individual is broken down into categories:

  • Income: the funds a person receives on a regular basis (such as employment pay, pension, rental income or Social Security benefits).
  • Assets: the other resources a person holds (bank accounts, stocks, bonds, real estate, vehicles, retirement accounts, life insurance, etc).

After a resource has been categorized as income or an asset, it will then be decided if it is “countable”. Countable assets are those assets considered when determining if a person qualifies for benefits. Some assets are not countable; they are considered to be “excluded”. The most common assets in the excluded category are a person’s homestead, one vehicle, certain pre-paid burial items, personal items and small amounts of life insurance.

When determining eligibility for a single person in a nursing home, the asset limit is $2,000. However, over time, higher asset limits have been established to protect a spouse still living at home (“Community Spouse”), when the other spouse needs nursing home care. Currently, under some circumstances the asset limit for a Community Spouse can reach up to $123,600.

What does Medicaid provide?

As you can imagine, what Medicaid provides depends on the program. As described above, the benefits that are provided through Medicaid programs vary from medical services to emergency utility help and much more. As an elder law attorney, my clients are often curious about what Medicaid can do for an individual in a nursing home. For an individual who has qualified for Medicaid assistance in a nursing home, he or she must contribute the majority of his or her income to the nursing home. If a person in the nursing home has a Community Spouse, income of the spouse in the facility can be diverted to the Community Spouse to ensure that she or he does not become completely impoverished. The rest of the cost of the facility is paid for through the Medicaid program.

At Buhl, Little, Lynwood & Harris, PLC, we are fortunate to have several attorneys who are familiar with the programs that affect our clients the most, the Long Term Care Medicaid programs for people needing nursing home care. If you need more information, we’re here to help.